eb-5 ice memo & grassley letter
TRANSCRIPT
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December 12, 2013
VIA ELECTRONIC TRANSMISSION
John Sandweg Acting DirectorU.S. Immigration and Customs EnforcementU.S. Department of Homeland Security500 12th Street, SW Washington, D.C. 20536
Dear Acting Director Sandweg:
I write to inquire about an internal U.S. Immigration and Customs Enforcement(ICE) memo that raises significant questions about U.S. Citizenship and ImmigrationServices’ (USCIS’s) EB-5 Regional Center program. The memo is from HomelandSecurity Investigations (HSI), an investigative arm of ICE. It appears to have been written in response to a request from then-Secretary Janet Napolitano.
One section of the memo outlines “concerns that this particular visa program[EB-5] may be abused by Iranian operatives to infiltrate the United States . . . .”1 Two ofthe operatives allegedly “facilitate terrorism and are involved in an illegal procurement
network that exports items to Iran for use by ‘secret’ Iranian government agencies.”2 According to the memo, one of the operatives acted as a representative in the U.S. for anIranian front company allegedly run by an individual associated with Iran’s IslamicRevolutionary Guard Corps.3
This is not the first time that Iranian operatives have been discovered operatingin the United States. In the spring of this year, Manssor Arbabsiar, who had bothIranian and U.S. passports, was sentenced for plotting with Iranian military officials tokill the Saudi Arabian ambassador by bombing a Washington, D.C. restaurant.4 Earlierthis fall, news outlets reported that the U.S. had intercepted an order from Iran to attack
1 Undated memo, “EB-5 Program Questions from DHS Secretary,” Homeland Security Investigations, U.S.Immigration and Customs Enforcement [Attachment].2 Id. at 2.3 Id.4 Press release, “Manssor Arbabsiar Sentenced in New York City Federal Court to 25 Years in Prison forConspiring with Iranian Military Officials to Assassinate the Saudi Arabian Ambassador to the UnitedStates,” Department of Justice, May 30, 2013, available at http://www.justice.gov/opa/pr/2013/May/13-nsd-621.html.
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U.S. interests in the event of a strike on Syria.5 In light of these facts, it is alarming tosee documentation that appears to indicate Iranian operatives used the EB-5 program totry to obtain visas for their associates.
According to the HSI memo, ICE identified seven main areas of program vulnerability with the EB-5 visa:
1) Export of sensitive technology/economic espionage;2) Use by foreign government agents/espionage;3) Use by terrorists;4) Investment fraud by regional center;5) Investment fraud by investors;6) Fraud conspiracies by investors and regional center; and7) Illicit finance/money laundering.6
The memo states: “The aforementioned vulnerabilities are directly affected by
information gaps on the alien beneficiaries of the EB-5 program. Unlike most otherpermanent resident visa classifications, EB-5 beneficiaries do not need to establish asignificant and verifiable background for program eligibility.”7
According to the memo, HSI made several suggestions for both informationcollection fixes and legislative fixes to close loopholes in the EB-5 program. Of theinformation collection fixes, the memo states: “HSI proposed making changes to theUSCIS forms (I-526, I-829, I-924, and I-924A) that are used by RC’s [regional centers]and alien investors. HSI felt that the forms did not collect enough information todetermine the validity of either the RC’s, the alien investors or the source of theinvestor’s funds.”8
The legislative changes proposed by HSI were: (1) doubling the minimuminvestment amount, (2) limiting the program to allow only active investors involved inmanaging and directing a business enterprise, and (3) eliminating the consideration ofinduced jobs for meeting the requirements of the program. These suggestions were notincluded in the technical assistance provided by USCIS in June 2012 when the EB-5program was being reauthorized. The only HSI recommendation which appeared in anyform in the technical assistance was a proposal for providing inflationary adjustments tothe minimum investment amount, which is very different from doubling it.
The HSI memo makes clear that overall, HSI believes the Regional Center model
has significant flaws and should be abandoned: “The principal change proposed by HSI was that the Regional Center Model be allowed to sunset, as HSI maintainsthere are
5 Julian E. Barnes and Adam Entous, “Iran Plots Revenge, U.S. Says,” Wall Street Journal (Sep. 6, 2013),available at http://online.wsj.com/article/SB10001424127887323893004579057271019210230.html.6 Undated memo, “EB-5 Program Questions from DHS Secretary,” Homeland Security Investigations, U.S.
Immigration and Customs Enforcement, at 4. 7 Id.8 Id., at 5.
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no safeguards that can be put in place that will ensure the integrity of theRC model.”9
Given these concerns with the EB-5 Regional Center program and informationgaps on recipients of EB-5 visas, it is important that Congress have statistics on whathappens after individuals enter the U.S. on an EB-5 visa. Foreign investors whoparticipate in the EB-5 program may receive conditional permanent residence for a two- year period. However, it seems unlikely that they are ever removed from the countryeven if the conditions of their conditional status are not met because the required jobs weren’t created within the required period.
Therefore, please respond to the following:
1. Please produce all legislative and information collection recommendations made by ICE or any of its divisions for the EB-5 program. Please provide in detail anyspecific changes recommended for USCIS forms I-526, I-829, I-924, and I-924A.
2. For each of the above recommendations, please identify the date ICE proposedthe recommendation and to what entities it was proposed.
3. What is the current total number of EB-5 conditional residents whose request toremove conditional status was denied?
4. Does ICE know how many EB-5 investors who were denied permanent residentstatus remain in the country? Does ICE know the location of these foreigninvestors? If so, please provide a status report, including how many are detained,how many are in removal proceedings, and how many have been removed fromthe country by ICE.
5. Do you or your agency have any information as to why USCIS did not provideCongress with the legislative recommendations made by HSI, as indicated in theattached memo?
6. What is ICE doing to help ensure that USCIS does not provide EB-5 visas toindividuals and entities that are involved in international terrorism orproliferation operations, as was the case with Iranian operatives whose goal wasto infiltrate the U.S. and export items back to their country?
7.
What is the current status of the Iranian case mentioned in the memo?
8. What type of visas did the two Iranian operatives mentioned in the memo enterthe U.S. on?
9 Id., at 4 (emphasis added).
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9. Is the principal of the regional center referenced in the memo in the UnitedStates? If so, what type of visa did the principal enter the U.S. on?
10. For each individual associated with the principal of the regional center through
TECS subrecord hits, please indicate whether or not the individual has enteredthe U.S. in the past or is currently in the U.S., as well as what type of visa eachindividual entered the U.S. on.
11. What is the current immigration status of each of the individuals referenced inquestions 8, 9, and 10?
Thank you in advance for your cooperation in this matter. Please respond tothese questions by January 1, 2014. Should you have any questions regarding this letter,please contact Tristan Leavitt of my staff at (202) 224-5225. I look forward to yourprompt response.
Sincerely,
Charles E. GrassleyRanking Member
ATTACHMENT
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Attachment
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U.S-.
mmigration
and Customs
Enforcement
Hotvtu-aNo tcunrrv
lNvssrtcerloNs
I nt' t gat t'e P ograms
EB-5
Program
Ouestions
rom DHS Secretarv
The following information s provided n responseo a U.S. Immigrationand CustomsEnforcement
(ICE)
HomelandSecurity
nvestigations
HSI)
Taskingbasedon
request rom
DHS, number 66820,
titled
Request or Information
mplicationsof
ICE CaseAgainst Procurement
gent. The
answers o these
questions
re each
marked
U/FOUO):
1.
(U//FOUO)
Please
give
a brief
overview of the
EB-5
visa
program,
including
the ability and
process
of
petitioningfor
additional workers
using
other
visa codes.
ICE defers o U.S.
Citizenshipand
mmigration Services
USCIS)
or a
full overview of the
EB-5
visa
program;
however,
CE
provides
he
following information.
The EB-5
visa was created y
Congress
n 1990as a means o stimulate
he U.S. economy
hroughcapital
nvestmentby
foreign
investors. A maximum
of 10,000
mmigrantvisasper yearareset aside or qualifying foreign
investors and
their immediate
families
(spouses
nd
unmarried children
under age
2l). The basic
requirements f the
program
are hat he
alien must nvesta
minimum of
$
1,000,000.00n a
new or
existingU.S.
business, r a
minimum of
$500,000.00
f the business
s located
n
a
Targeted
Employment Area
(arca
at the time of
investmentexperiencing
an unemployment
rate of at
least
150% of the
national average)or a
rural area,and the
investment
must either createor
preserve
a
minimum of ten
full time
obs
for
qualifying
U.S. workerswithin
two
years.
The
invested unds
must be wholly owned by the alien
investor
and
must come
from a legitimate
source,and the
investment
must
be
at risk . After
the
qualifying
investment
s made,
he alien and
his or her
immediate amily members
may file a form
I-526,Immigrant
Petitionby Alien
Entrepreneur.
f the
form I-526 is approved,
he alien and
his or her family
members an be
granted
an
EB-5 visa and
becomeConditional
Residents f
the U.S. Within 90
daysof the two
year
anniversary
f being
admitted
o the U.S. as
Conditional
Residents,he alien and
his or
her family members
may file a
form I-829, Petition by Entrepreneur
o
Remove
Conditions,
and
become
Permanent
Residentsof
the U.S.
Under
a
pilot program
first
established
n 1992,
and
enewed
several imes
since, he alien
investor
can
nvest n a Regional
Center
RC)
that hasbeenapproved
y USCIS.
When
investing
n a RC,
the
alien investor does
not have o take an active
role in the day
to day
managementof
a company,
but simply becomes
a
passive
nvestor n a limited
partnership. Another advantage
o the
alien
is
that when
investing in a
RC, the alien does
not have o show
that ten direct
obs
were createdor
preserved.The businessor EB-5 visa holder may petition for foreign workers in the samemanner
as any otherbusiness
s ong as
he minimum of
10 full-time U.S.
workers
s
maintained n order
o
continue
n the EB-5 status.
Rather, he
createdor
preserved
obs
can be any
combination
of ten or
more direct, ndirect
or induced
obs,
using any
reasonable alculation
he RC chooses
o use.
Unofficial estimates
rom
USCIS
indicate
that over 90o/o f
the applicants
or EB-5 visas
now
invest
in theseRCs, and a
majority of all
investments re
at the lower
$500,000.00
mount.
As of
June
2012, here
were 205 approved
RCs
n the U.S., 193
pending
new
RC requests,
nd 59
amendment
requestso
previously
approved
RCs.
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Hovnr.qNnSscunr-ryNvsslctrloNs
I nv stigativP o
grams
2.
(UIFOUO)
Explain the relevance
of the EB-S visa
in this specific case,especially the
application
process
and vetting of applicants,
such as checks
or
derogatory
information.
The EB-5 programandthe RC model in particular,became he focus of an interagency eview in
early
FY
2012. In reviewing he
program,
CE
Homeland
Security
nvestigations
HSI)
representativesearned
hat USCIS was not conducting
background ecord checksof RC
operators,
managers,
nd
principals.
Based
on
this review
USCIS changed usiness
ractices
o
include
checkingEB-5
sponsor ompany
names,
associated ddresses,
nd
ndividuals
against he TECS
subject ecord
database.USCIS has since ound
a
number
of
links
betweenEB-5 sponsors,
businesses,
rincipals,
and associated
ddresses, ith the subjects f HSI and other
agency
investigations.
The HSI Visa
Security
Program
(VSP)
currently screens
ll counter-proliferation and export control
securityadvisoryopinion
(SAO)
referrals. VSP is
currently
n
the
process
f expanding o screen
100% of non-immigrant visa applicantsbefore visa adjudication hrough the PATRIOT program.
PATRIOT is
scheduled o begin full screeningand vetting
of
all non-immigrant
visa applicants
from
the l9 overseas isa SecurityUnits. Expansion
o cover all other
posts
will occur as resources
becomeavailable. VSP
efforts
nclude
screening ot
ust
the applicant,but also
U.S.
sponsors/pointsf contact,addresses,
hone
numbersand
email addresses ssociated ith the visa
application againstDHS-held information.
Any derogatory nformation identified during the
screening s
analyzedby a VSP intelligence analyst and referred o an HSI special
agent
or final
vetting and
determination. Future
plans
nclude
expanding he screening
process
o
immigrant,
refugee,
asylumand other mmigration
applicants.VSP works closelywith
partner
agencieso
conduct
posGadjudicated
nd ecurrentvetting
ofvisa applicants
or
any
terrorist
connections.
n
the
investigation,
he three
dentihed
subjects ave TECS records, hereforea related
application
would be
found
by VSP screening
efforts.
3.
(U//LES)
Provide
an operational update on the actions taken against
and the
individuals involved in this case.
In January2010,
he HSI Counter-ProliferationnvestigationsCenter
CPIC)
received
information that
and
facilitate
terrorism
and are
nvolved
in an illicit
procurement
network that exports tems to Iran for use by secret
Iranian
government
agencies. The investigation revealed nvolvement by and
in
procuring
a variety of
goods
or
Iranian
entities and they appear o be associatedwith a
network
involved n a
series
ofinternational
assassinationnd
errorism
operations.
In 2012,
was
indicted for his role in exporting electronics o Iran and was
subsequently rrested n
2013.
In addition, he HSI CPIC
investigation
revealed hat
place
of employmen
is a
participant
n the EB-5 investorvisa
program.
Based
on
concerns hat this
particular
visa
program
may be abusedby Iranian operatives o infiltrate the United States,
he HSI
CPIC initiated
a
oint
investigationwith the HSI Documentand
Benefit
Fraud Group.
U.S_.mmigration
and Customs
Enforcement
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The investigation
revealed acted
as a U.S. representative
or an
Iranian front company
suspected f
involvement
in facilitating terrorism and
proliferation
activities.
The company,
appears o be
run by
an
individual
associated
with
Iran's Islamic
RevolutionaryGuard Corps (IRGC). is named n a UnitedNations report as an entity that
smuggledarms o
militia
groups.
The
CPIC discovered
vidence ndicating
the
network
received diamondsas
payment
or thesearms
shipments.
Recentdevelopments
n the investigation
nclude the discovery of
a -based
procurement
agent
nvolved in this network,
who appears o
represent he
procurement
rm of
is likely involved n
procuring
sensitive
electronics
rom
U.S. electronics
irms with a suspected
ltimate destination f
Iran.
also appears
o be
involved with an
Iranian electronics
irm that, according o open-source
nformation, services
ran's
IRGC and the
Ministry of
Intelligence and Security.
A review of electronic
correspondence
rom
email account
ndicatesan association
ith
an
Iranian
citizento whom
he
passed
nformation regarding explosive
components.
an
employee
of
and a
network associate,was
recently arrested
n
for
allegedly
eading assassination nd
terrorist operations
n
, and the
country of
a.
email accountalso
ndicates e
procured
he same
size and ype of ball
bearings
ound n improvisedexplosive
devices ocated
n
apadment.
4.
(U//FOUO)
Identifu the
procedural
or information
gaps
in
the EB-5
visa
program
and other
similar
programs
and any
recommended
mitigating steps
o address
hese
isks.
ICE recommends
USCIS also be
consulted
or this information.
ICE
provides
he following
suggestions.
Through
its
participation
on
the inter-agency
working
group,
HSI Identity
and Benefit
Fraud Unit
(IBFU)
and other affected
agencies
dentified seven
main areas
of
program
vulnerability
with
the EB-5 visa.
These
program
vulnerabilities
are
as ollows:
U.S.
mmigration
and Custoirs
Enforcement
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I
nvestgativP ogr m
1.
Export of SensitiveTechnology Economic
Espionage
2.
Use by
Foreign
GovernmentAgents Espionage
3. Use by
Terrorists
4. InvestmentFraudby Regional
Center
5. InvestmentFraudby Investors
6. Fraud Conspiracies
y
Investors
and
Regional
Center
7.
Illicit Finance
Money
Laundering
VSP only screenedEB-5 immigrant
visa applicantswho were referred or an SAO relating
to
counter-proliferation
r export control. n2012, VSP
provided
guidance
o all
HSI
Visa Security
Units to include the EB-5 immigrant
visa category n their targeting
profiles (beyond
only
counter-
proliferation
or export controls).
The aforementionedvulnerabilities
are directly affected by information
gaps
on the alien
beneficiaries f the EB-5
program.
Unlike most
other
permanent
esident
isa classifications, B-5
beneficiariesdo not need o establisha significantand verifiable background or program eligibility.
For
example,
permanent
esident classifications or employment require
proof
of
education
andlor
experience, hile family-based
isas
equire
positively
demonstrating ona-fide elationships.
Theseclassifications
provide
greater
nformation
that can be researched, etted, or cross-checked
than
that required
of an
EB-5
applicant. Conversely, he
primary
requirement or EB-5
eligibility
is
a
lawful
sourceof investment ncome. However,
verifying the legitimacyof
investment
ncome
sourcess difficult. Therefore,
he
primary qualiffing
criteria or EB-5 beneficiariess both imited
in scope
and hard to confirm.
In
addition o the information
gap
on EB-5 beneficiaries,
hereare
procedural
ssues
associated
ith
the approval and
operation of
RCs
that
lead
to vulnerability.
The
HSI
review has
uncoveredserious
concerns
about he credibility of the RC
platform.
The nature of indirect
ob
growth
is
problematic,
and basedalmost solely on a RC's
ob
creationmethodology
as described
n applications o USCIS.
HSI conducted esearch
sing
ob
creationstatistics sedby large corporations nd he U.S.
government
stimulus
package,
and has reason
o believe that
the RCs are
greatly
exaggerating heir
indirect
and
nduced
ob
creation
igures.
By not having o
provide
evidenceofjobs directly
created, he RC inherently createsan opportunity for fraud, where the business
goal
can be initiating
projects
hat
give
the
appearance f creating
ob
growth,
with the sole
ntent to meet
USCIS criteria
rather
han
produce
obs.
Basedon the concerns utlined above,HSI madeseveral uggestionsor both
legislative ixes
and
informationcollection ixes to close oopholes n theEB-5
program.
The
principal
change
proposed
by HSI was hat the RegionalCenterModel be allowed o sunset, s
HSI maintains here
are
no
safeguardshat
can
be
put
in
place
that will
ensure
he integrity of the RC
Model. In
the absenceof
the
elimination
of the
RC Model, HSI
proposed
aising
the
minimum investment amount to
$2,000,000
r
$1,000,000
or TargetedEmploymentAreas,as he
minimum investmentamounts
had not
changedsince he
inception
of the
RC
Model
in 1992. Raising the required nvestment
amount would make fraud more inconvenient and
provide
a
more legitimate basis o meet the
ob
creation
goals
of the
program.
U.S-
mmigration
and Customs
Enforcement
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stigat
veP
o
grams
U.S.
mmigration
and
Custoirs
Enforcement
Additionally,
the EB-5 program
should
be
open
only
to
active
nvestors
nvolved
n
managing
and
directing
a
business
nterprise,
nd
not
to
passive
artners,
which
would provide
a heighteneJ
degree
of
certainty
regarding
he intentions
of
the
ilien
applicant.
Passive
nvestors
are
too
far
removed
rom
these
projects
o
have
any verifiable
connections
r
ties.
Finally,
induced
obs
should
not
be used
as
a measurement
fjob
creation;
only
direct
obs,
and
indirectjobs
created
rom
suppliers,
artner
entities,
and
direct
support
could
be
considered.
Further,
ndirect
obs
must
be
verifiable
n
the
targeted
geographic
rea.
Induced
obs
based
on
increase
n
economic
activity
should
not
be
used
owardt
G requirement
f
creating
0
jobs.
Jobs
created
irectly
are
easier
o verify
and
substantiate,
oth
by the
RC
and
USCIS.
On
September
28,
2012,
President
Obama
signed
a three year
reauth
orizationof
the
EB-5
RC
Program.
The
RC
Model
was
renewed
without
any
changes.
In
addition
o
the
proposed
egislative
edits,
HSI
proposed
makingchangeso theUSCIS forms (I-526,I-829,1-924
andl-924A)
that
are
used
by RC,sind
alien
nvestors.
HSI
felt
that
he forms
did
not
collect
enough
nformation
o
determine
he
validity
of
either
he
RC's,
the
alien nvestors
or the
source
of
the
investor's
unds.
HSI
submitted
o USCIS
a
series
of recommended
uestions
o
be
included
on
the
aforementioned
orms,
as
well
as
additional
recommended
security
checks,
o help
address
he
sevenprogram
vulnerabilities
that
were
identified.
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